The Top 5 Factors Driving and Detracting Value From a Business Prepping to Sell
Our M&A experts from the BizNexus Community shared with us some insight into what they’ve routinely observed as the top five factors driving and detracting value from a business prepping to sell and offered up some quick advice. Read below to see what they had to say.
#1 Deferred Maintenance
Many owners will say they will probably exit in 5 years, but these same owners won’t want to prepare until they have decided to sell. This clearly detracts from the overall value.
Bob Fariss @ Murphy Business Sales
#2 Clear Financials
Lately, I have seen too many businesses with sloppy or incorrectly done financials. Businesses that should be doing accrual accounting are not, P&L’s that don’t match the tax returns, incorrect COGs. These all make a buyer suspicious and reduce the amount they are willing to offer. The cost for a good bookkeeper is small compared to the reduction in offering price when the financials are suspect.
Joshua Meltzer @ Sunbelt Business Brokers of Boston & Providence
#3 Seller Mindset
The seller has to have the right attitude about the entire process of selling a business, including the market-tolerate value of the business.
George Scott @ Business Consulting Solutions, LLC
#4 Business Operations
Lack of having an operations management team in place detracts. Take the time to put together a proven team, it takes a while no matter how much money you throw at it but it’s worth it to the buyer and you as a seller.
Bob Latham @ Altapraem M&A Advisors
#5 Unreasonable Expectations
It seems like there is never just one. Customer concentration can seriously detract from value. Sellers unreasonably expecting all cash at closing is a big detractor.
Mark Mroczkowski @ Champman Associates, Inc.
#6 Owner’s with Too Many Responsibilities
The owner having too many responsibilities and not preparing management team to take over some/all of the duties. Messy financials....P&L's don't match tax returns
April Femrite @ True Real Estate Mankato
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